Cannabusiness Developments: Mexico, Canada and the Amazon(.com of Pot)

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Some interesting developments have taken shape since we took an extended look at the cannabis supply chain (start with Part 1 here if you haven't yet sampled).

First, our neighbor to the south, Mexico, legalized medical marijuana, after President Enrique Peña Nieto signed a law that Mexico's Congress had approved in early May. Then, our northern neighbor, Canada, realized it is facing a supply shortage if plans to legalize recreational marijuana, announced in April, come to fruition.

With one research firm estimating North American sales to reach $22 billion by 2020 — with already an estimated $46.4 billion in N.A. black market sales last year, according to this article — a lot is riding on the supply chain keeping up with legislation and vice versa.

We also continue to find new-to-us SCM technology platforms coming out of the e-commerce marketplace woodwork. We had a chance to catch up with Rob Fess, Director of Marketing at Tradiv, who underscored certain perspectives highlighted in our cannabusiness series, as well as viewpoints contrary to the experience of other U.S. cannabis marketplace participants.

Are you the Amazon, or the Amazon Business, of the cannabis marketplace/supply chain? 

That’s probably the most recognizable analogy and many have referred to us as the “Amazon of Cannabis.” The comparisons come, in part, because of the slick, e-commerce-style marketplace we launched with. However, we’ve discovered that market isn’t quite ready for an Amazon-esque platform just yet and really prefers to interact with humans in the traditional cannabis buyer/broker format via phone and text.

Interesting. Explain where a cannabis broker fits specifically within the supply chain, and their exact function.

Traditionally, brokers are the go-between for cultivators and wholesale buyers. Brokers typically worked independently and earned the trust of both parties, and often fronted cash and took care of the logistics of moving product. They made their living with a markup on the product or with a percentage take on the transaction. We often view Tradiv as a tech-augmented brokerage using digital tools to reduce overhead and connect cannabis producers with wholesale buyers at a fraction of the cost.

Where do you see blockchain technology fitting into the digital age of cannabis?

Blockchain has the potential for becoming the means of managing secure transactions for wholesale cannabis. In fact, if the feds don’t sort out mainstream banking for our industry, it’s quite possible that cannabis could propel a blockchain transactional system to the forefront of e-commerce and ultimately commerce, in general. This would follow suit much like we’ve seen with other “fringe” industries, and how the online adult media industry pushed companies such as PayPal and technologies like video compression well beyond their then-scale and capabilities.

How will certain markets (like Canada, for example) deal with supply shortages? How can technology enable them to hedge against that risk?

At the end of the day, cannabis flower will likely become a commodity, not unlike cut flowers or even tomatoes. What is now isolated, fragmented knowledge, due to the long-term underground nature of growing, will become openly shared information. This will lead to rapid advances in production. Additionally, mainstream agricultural best practices will come into play, and time-to-market and yields will be optimized. Further, seasonality and demand will better define growing cycles. All of these factors will come together to make cannabis just as stable as any other commodity market.

Anything else we — or cannabis practitioner organizations — should be asking?

Of absolute concern is the current political climate. With people like [U.S. Attorney General Jeff] Sessions and his outdated ideas regarding cannabis, in power, we could easily end up back in a black-market cannabis economy, losing all of the potential tax revenue to organized crime and, more important, with unsafe product making its way to consumers.

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